to be useful to understanding not only markets with easily producible products and low

transactions costs (many financial markets), where continuous equilibrium is likely a good

first approximation, but also markets for real property, where equilibrium does not continuously exist.This review features the most fundamental equilibrium conceptthat expected riskadjusted returns are equal, at least as a first approximation, across different investments.1

Topics where application of the return equivalence theorem has added significant value

include estimation of the required risk premium on different classes of real estate and

explanation of real house price appreciation. Moreover, a long-run variant of this theorem

applied to the space marketthat market rents must equal the investment user costis